This lesson delves into the legal and operational definition of the banker-customer relationship, establishing the foundational rights, duties, and obligations of each party .

3.1 Defining ‘Customer’ and ‘Banker-Customer Relationship’
A ‘customer’ is an individual or entity who has an account with a bank, even if it is a small or one-time account. The relationship between a banker and a customer is a contractual one, governed by common law and statutory regulations .

3.2 Forms of the Banker-Customer Relationship
The relationship can take on several legal forms depending on the context :

• Bank as Debtor: When a customer deposits money, the bank becomes a debtor, owing that money back to the customer.

• Bank as Creditor: When a customer takes a loan, the bank becomes a creditor.

• Bank as Trustee: When holding assets in a fiduciary capacity (e.g., for a trust account).

• Bank as Agent: When acting on behalf of the customer, such as when collecting cheques or executing transfers.

• Bank as Bailee: When holding physical valuables (e.g., in a safe deposit locker).

3.3 Bank’s Duties and Rights
The bank has specific duties:

• Duty of Secrecy: The bank has a legal and ethical obligation to maintain the confidentiality of a customer’s affairs .

• Duty of Reasonable Care: The bank must exercise reasonable care and skill in its dealings with the customer .
  The bank also holds rights to protect its interests, including:

• Bank’s Lien: The right to retain a customer’s assets until a debt is paid .

• Right of Set-Off: The right to set off a customer’s debt against their credit balance .